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A lack of fresh catalysts kept the majors in tight ranges in the last few hours.

That doesn’t mean we won’t see action during the U.S. session though!

Today I’m specifically looking at USD/CAD’s consolidation. Before we talk setups, though, check out the top headlines during the Asian session:

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Economic Calendar:

  • Eurozone current account at 9:00 am GMT
  • Fed’s Powell to participate in a virtual panel discussion at 1:00 pm GMT
  • U.S. existing home sales at 2:00 pm GMT
  • FOMC member Thomas Barkin to give a speech at 2:00 pm GMT

What to Watch: USD/CAD

USD/CAD 1-hour Forex Chart
USD/CAD 1-hour Forex Chart

Earlier today traders priced in weekend headlines that Turkish President Tayyip Erdogan went all Trump on central bank Governor Naci Agbal and said “You’re fired!” two days after the latter hiked rates sharply to stem inflation.

Traders who are anticipating aggressive rate cuts sold the high-yielding Turkish lira and left interest rate differential geeks with losing positions. Markets worry that these losses could lead to the unwinding of other high-yielding bets and now safe-havens like the dollar and yen are kings of pips.

The drama hasn’t affected USD/CAD much though it supported the pair enough to keep it near the 1.2500 zone consolidation.

With not a lot of potential catalysts ahead, traders could continue to price in the potential move away from higher-yielding bets; extended lockdowns in Europe; disappointing data from Australia and New Zealand, and bond market volatility in the U.S.

This could push USD/CAD above the 200 SMA and hit the 50% or 61.8% Fib retracements closer to the visible trend line resistance.

But if traders decide to take on some start-of-week risks, or if we see global growth-friendly headlines during the U.S. session, then USD/CAD could extend its month-long downtrend and head for the 1.2450 and 1.2400 previous support levels.